New Delhi. Public Provident Fund (PPF) is a better investment option for long term. There are many benefits of investing in PPF. Not only is the investment safe in this, but it also gets tax exemption. The risk in this is negligible. The reason for this is that PPF is fully protected by the government. This is the reason that now the number of people investing in PPF is increasing every year.
Talking about tax benefits, it gives tax exemption under section 80C on investments. At the same time, there is no tax to be paid on the interest income and on the maturity amount. Not only this, subscribers can also take loan against PPF account. The interest on this loan is also not very high. The loan can be taken in the third and sixth year of opening the PPF account. This loan is especially beneficial for those who want to take a loan for a short period.
The central government revises the interest rate on the PPF account every quarter. The interest rate on PPF is always better than the savings account of the bank. If the interest of PPF is compared with the fixed deposits of many banks, then Public Provident Fund pays more interest to its subscribers than FD. A minimum of Rs 500 has to be deposited in the PPF account every year. If 500 rupees is not deposited in the PPF account in any financial year, then the PPF account becomes inactive.
Required to keep account active
A subscriber cannot get the benefits available through PPF when the PPF account is inactive. Therefore it is necessary to continue investing in PPF. If for some reason the PPF account has become inactive, then you do not have to worry. Inactive PPF account can be made active again. Yes, for this the account holder will have to pay some penalty and some paperwork will also have to be done again.
Get it back on again (How to revive deactivated PPF account)
To get the inactive PPF account revived, you have to contact the bank or post office where you have opened your PPF account. A form has to be filled to get the account activated again. Along with this, in the years in which you have not deposited the required amount in the PPF account, you will have to pay the arrears amount and also have to pay a fine of Rs 50 per year.
In the case of PPF, the penalty and arrears math is not very complicated. Let’s say your PPF account is closed for 4 years. So you will have to pay arrears of Rs 2,000 for four years. Along with this, you will have to pay a penalty of Rs 200 at the rate of Rs 50 per annum.